HSBC has launched the lowest ever fixed-rate mortgage deal as their rivals ramp up the cost of borrowing.

HSBc’s move has bucked the trend of other major lenders (Picture: PA)

The banking giant yesterday released details of a five-year product with a competitive rate of just 2.99 per cent.A seven-year fixed-rate mortgage for 3.99 per cent was also unveiled.Peter Dockar, HSBC’s head of mortgages, said the deals had been introduced to meet demand from customers wanting long-term certainty.He told how the bank’s lending criteria had always been ‘fairly conservative’ but added: ‘We are committed to offering competitive rates to benefit our customers with what is, for many, their largest monthly commitment.’Comparison website Moneyfacts said the five-year fixed-rate was ‘the lowest we have ever recorded’.But spokeswoman Rachel Springall warned borrowers to be wary as the products come with ‘high upfront costs’ such as a sizeable 40 per cent deposit and booking fees of £1,499.However, she added: ‘With the continuation of bad press for banks, it is possible we will see an increase in competition in an attempt to attract new customers with decent offers.’HSBC’s shock announcement comes just weeks after a string of lenders announced plans to increase their mortgage rates in the wake of economic uncertainty.

Thousands of people are also looking to switch their financial providers following NatWest’s IT meltdown and the Barclays Libor-fixing scandal.Three years of low interest rates have enabled mortgage lenders to offer some of their cheapest ever deals.Previously, the lowest five-year fixed-deal was offered by Chelsea Building Society at 3.19 per cent, Moneyfacts found.